Edmunds estimates that 32 per cent of trade-ins for brand new automobile acquisitions in the first nine months of the 12 months had “negative equity,” up from 30 % for similar duration year that is last. The upside-down shoppers had normal negative equity of more than $4,800 during the time of trade-in, which Edmunds stated may be the highest because it started monitoring such information in 2002.
About one fourth of trade-ins from shoppers purchasing utilized automobiles also had negative equity, averaging $3,600.
Being upside down on car finance is similar to being underwater on home financing, for the reason that the asset securing your debt may be worth not as much as the mortgage.
State which you owe $20,000 for vehicle now valued at $18,000. Which means you have got negative equity of $2,000. In the event that you trade in your automobile for a brand new automobile, you need to constitute that $2,000 somehow — either by composing a check or rolling the amount to your loan in the new vehicle.